Interview with Sebastian Schilling, Member of the Finance Leaders League

Meet Sebastian Schilling , VP of Finance of Germany’s Unicorn Taxfix and co-founder of the Finance Leaders League. In today’s interview, he’ll share his take on the use of cap table management. Let’s get going!

?In your opinion, what are some of the biggest challenges for fintech companies in the current economic climate, and how do you think finance executives can help address these challenges?

?? I believe in the current market situation with crypto having crashed in 2022 and more recently the SVB disaster, tech and more specifically fintech companies need to rebuild a lot of trust in their products. Especially younger companies need to make sure they invest sufficient resources in building reliable internal processes and a scalable tooling stack to prevent being caught off guard by growth pains spiraling out of control.

?Sebastian, you’ve seen many companies from the insight throughout your consulting / interim career - what made you join Taxfix full-time in 2019?

?? Taxfix has impressed me with their professionalism and their focus on a truly trusting culture from the very beginning. I was immediately convinced that I was going to be working with very smart, competent, and most importantly humble people who were always going to appreciate different viewpoints and take them seriously. Commercially speaking, I cherished the idea of a broad-based stock option program for which all permanent employees were eligible. And of course, the mission to make tax-filing accessible to everyone immediately resonated with me.?

?Can you explain the cap table management systems and how they’ve made your life easier?

?? Having chosen to offer stock options to all permanent employees, Taxfix had to manage its cap table basically since its inception. Initially, this process was spreadsheet-based - and heavily dependent on the diligence of one single employee. Put differently, the entire setup was error-prone, not auditable, and subject to key people risk. As you would expect, this risk materialized a few years ago.?

After a few sleepless nights trying to make sense of the numbers, I’ve finally had enough and decided to run a selection process for a cap-table management tool. Today, this tool is the single source of truth for the company’s cap table, modeling financing rounds, drafting ESOP allocation to employees, calculating vesting, and - most importantly - communicating the value of everyone’s individual grant.

?Besides internal stakeholders, how do investors or employees benefit from such systems??

?? Investors get a more accurate picture of how many options have been granted, vested, and terminated. Employees get for the first time an actionable view of how much their stake is actually worth subject to the current valuation.?

?When is the right time for implementing a tool such as Ledgy or Shareworks and which pitfalls should be avoided?

?? Generally, I believe in putting sound manual processes before poorly set up tools and there are a number of tools that are commonly introduced too early, when processes are still subject to regular change. However, when it comes to cap table management, the process of allocating and terminating stock options basically doesn’t change. In hindsight, I would have introduced such a tool with the first grant.

?What criteria do you use to evaluate cap table management systems, and what are some of the key features you look for in a software solution?

?? I firmly believe that successful tool selection - for any use case - depends on (1) meticulously understanding the problem you are trying to solve and (2) having a very clear conception of what constitutes a successful solution for you. This includes a selection of must-have, nice-to-have and out-of-scope criteria and a compilation of user stories for each set of stakeholders. Reach out to me via DM on LinkedIn or the Finance Leaders League and I’m happy to share this briefing.?

?Sebastian, can you share a moment that made you proud of what you have built with the Finance Leaders League??

?? Every time someone posts a question or challenge in an open channel on FLL and seeing a number of really helpful responses makes me really proud. I can still remember our early days five years ago when it seemed like we were all scared to open up and ask silly questions to a group of strangers - at least to me it seems like we really achieved a bit of a mindset shift here!